CPUC fines PG&E $16.7 million

The California Public Utilities Commission fined PG&E more than $16 million Friday for failing to conduct gas pipeline leak surveys on a stretch of pipeline in Contra Costa County.

PG&E said it was "surprised" by the $16.7 million fine, since the utility self-reported the problem to the state regulatory agency in December and has taken steps to survey the 14 miles of affected pipeline and repair the 22 leaks that were subsequently discovered on them.

"To receive a penalty this extreme for being open, transparent and accountable is disappointing," said Nick Stavropoulos, PG&E's executive vice president of gas operations. "In fact, members of the commission recently applauded the work our team did and the company's recognition of the employees who came forward."

PG&E apparently failed to conduct regular leak surveys of the affected pipelines because the utility's maps were not updated to accurately reflect new construction. While some of the new construction occurred within the past five years, in other places the violations date back to 1993, according to the CPUC citation.

"Because of the duration and seriousness of the violation and the numerous opportunities PG&E had to find these problems earlier, we concluded that a citation was warranted," said Michelle Cooke, interim director of the CPUC's Consumer Protection and Safety Division.

Friday's citation is the first under a new program authorizing CPUC staff to issue fines without the approval of the commission. The citation program, approved in December, is one of a number of changes the agency has made in response to the September 2010 San Bruno pipeline explosion, which killed eight people, injured scores of others and destroyed dozens of homes.

PG&E has 10 days to either pay the fine with shareholder dollars or submit an appeal. The utility is reviewing the citation and fine to determine whether to appeal, spokesman Brian Swanson said.